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AUD/USD Weekly Fundamental Analysis – week of May 30, 2016

By:
Barry Norman
Published: May 28, 2016, 05:45 UTC

The AUD/USD is trading at 0.7226 dipping 0.57% as the greenback climbed to a new high on Friday. It is a big data week ahead for Australia with the

AUD/USD Weekly Fundamental Analysis – week of May 30, 2016

The AUD/USD is trading at 0.7226 dipping 0.57% as the greenback climbed to a new high on Friday. It is a big data week ahead for Australia with the calendar offering inflation (PPI), housing, trade balance, service and manufacturing PMI’s and GDP for Q1. GDP may glean extra attention that usual after RBA slashed inflation forecasts and rates, yet kept their GDP targets unchanged. If we do see a surprise to the downside, then this could quickly see traders price in another rate cut for June to send AUD lower.

Assuming no surprises from GDP then we get a forward look into Q2 GDP with manufacturing and services PMI’s. Manufacturing, the smallest contributor to GDP shows signs of promise but when compared to dwindling investment expectations with Capex data then we have to take this into contact. Services meanders around the 50 level but has spent 7 of the last 9 reads contracting. Construction, whilst expanding mildly at 50.8, spent the prior 4 months contracting between 45.2-46.8.

The dollar powered higher on Friday after Federal Reserve Chair Janet Yellen said the US economy was improving enough to support an increase in interest rates “probably in the coming months.”

Yellen, speaking at a Harvard University event, said that since the economy’s slowdown in the first quarter, activity appeared set to accelerate and the labor market, where the unemployment rate has fallen to 5.0 percent, would continue to strengthen.

“The economy is continuing to improve,” Yellen confirmed. “Growth looks to be picking up.” In that case, she said, “probably in the coming months such a move would be appropriate.”

Yellen’s comments opened the door to a rate hike at the June 14-15 or July 26-27 meeting of the policy-setting Federal Open Market Committee.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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Major Economic Events for the week:

Time Cur. Event Actual Forecast Previous  
Monday, May 30, 2016
      United Kingdom – May Bank Holiday
      United States – Memorial Day
Tuesday, May 31, 2016
    EUR CPI (YoY) (May)   -0.1% -0.2%  
    CAD GDP (MoM) (Mar)   -0.1% -0.1%  
    USD CB Consumer Confidence (May)   96.0 94.2  
Wednesday, June 1, 2016
    CNY Manufacturing PMI (May)   50.0 50.1  
    AUD GDP (QoQ) (Q1)   0.6% 0.6%  
    CNY Caixin Manufacturing PMI (May)   49.3 49.4  
    GBP Manufacturing PMI (May)   49.6 49.2  
    USD ADP Nonfarm Employment Change (May)   180K 156K  
    USD ISM Manufacturing PMI (May)   50.5 50.8  
Thursday, June 2, 2016
    AUD Retail Sales (MoM) (Apr)   0.3% 0.4%  
    GBP Construction PMI (May)   51.9 52.0  
    EUR Interest Rate Decision (Jun)        
    USD ADP Nonfarm Employment Change (May)   175K 156K  
    USD Crude Oil Inventories     -4.226M  
Friday, June 3, 2016
    GBP Services PMI (May)   52.5 52.3  
    USD Nonfarm Payrolls (May)   161K 160K  
    USD Unemployment Rate (May)   4.9% 5.0%  
  USD ISM Non-Manufacturing PMI (May)   55.5 55.7

 

 

 

 

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